Alitalia is in debt to the tune of €1.2 billion, and shareholders in the airline gave unanimous approval to a capital increase of up to €300 million last month in a bid to save the firm from bankruptcy.
Then earlier this week, the Italian airline announced it had pushed back Thursday's deadline for subscription to the capital increase to November 27th to give shareholders such as Air France-KLM time to look at a new strategic plan adopted by the board.
But on Thursday, the Franco-Dutch group - which owns 25 percent of Alitalia - announced it would "not subscribe to the capital increase."
"Even if the industrial component of the new plan presented yesterday (Wednesday) by Alitalia is a step in the right direction and is receiving Air France-KLM's full support, the necessary financial restructuring measures are still not yet met," the group - which itself is in the midst of a major restructuring plan - said in a statement.
Alitalia said Wednesday that the new plan proposed "reducing the number of medium-range planes, but keeping the number of flights seen in 2013 thanks to a better use of the fleet".
It said it included a "severe reduction of costs", adding that "the number of international and intercontinental flights will be increased".
There was no mention of possible job cuts in the company's statement.
Alitalia was already bailed out by taxpayers five years ago in a controversial operation that handed a consortium of private Italian companies a majority stake, part of which was later sold to Air France-KLM.
But it is still struggling, and Italian energy group ENI has threatened to ground the fleet of planes by stopping fuel supplies because of unpaid debts.
Alitalia says Italian banks are lined up to lend it 200 million euros. And the state-owned Italian postal service has been tapped to contribute up to €75 million to the capital increase, triggering rivals' allegations of illegal protectionism.